The guys discuss the most recent lawsuit involving Paris Hilton's breach of contract and answer, "Is it legal to record audio of employees in the workplace without their consent?"

Transcript:

NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: Welcome to our business legal podcast where we cover business in the news and add our legal twist and also answer some of your business legal questions that you, the listener, sends in to ask@legallysoundsmartbusiness.com. I almost forget the dot-com there.
MATT: That’s all right.
NASIR: I nailed it.
MATT: We bought all of them – all the domain extensions
NASIR: That’s right.
Actually, I looked into dot-pizza. Apparently, dot-pizza is not out yet. I was going to buy just the waiting list one but I wasn’t sure how that works. As soon as it comes out though.
MATT: I find it hard to believe that stuff is going to catch on, but who knows?
NASIR: Yeah, we’ll start it, for sure.
Well, I’m excited for this episode. I think it’s going to be our best episode ever because we’re covering your favorite celebrity.
MATT: Yeah, and I didn’t even know Paris Hilton was relevant. I don’t understand why she was even relevant in the first place it’s a lawsuit that involves Paris Hilton and I’m sure this isn’t the first lawsuit she’s been a part of but it basically deals with a breach of contract claim. They’re saying that she breached her licensing agreement. I guess she had a sponsorship deal with a shoe company, Antebi Footwear Group. She had some deal with them and basically got in trouble for promoting one of their big competitors on her social media which to me is not a surprise because she never came off as intelligent so I’m not really shocked by this.
NASIR: Yeah, some rival product called Parisian Parc Footwear. We are so out of touch. I have no idea what these two companies are and what they do. Well, I guess they sell footwear.
One of the reasons we’re bringing this up is they are saying that she breached the covenant of good faith and fair dealing. Now, this is an interesting concept because this covenant of good faith and fair dealing sometimes is just put in as a clause in the actual agreement but, a lot of times, this is just an implied term in every agreement. The point is that Paris Hilton may not have a term that says you can’t promote a competitor’s product on Twitter in a term and saying, “Okay, well, now I guess I can do that.” But this implied faith and good dealing covenant is actually considered a term in there and it could be a cause for breach.
MATT: Yeah, and the reason it’s in there is for examples just like this and so it’s not really surprising. I always think it’s interesting. You’ll see this in sports. An athlete will be contracted with one shoe company like Nike and then they’ll play for a team that’s sponsored by another company like Adidas and there’s always issues of conflict. “Well, I’ve got to wear my shoes – the company that I have a deal – but I’m playing for the US National team that has a deal with this other company. what am I supposed to do?” There’s probably outs in that situation but not for this where Paris Hilton just appears to be not the smartest.
NASIR: If you read between the lines, this is what happened it looks like this company sued Paris only in response because Paris Hilton filed a lawsuit saying that they having been paying royalties for about a million dollars or so. And so, what it looks like is she may have tweeted this or promoted this competing product and this other company stopped paying her. And so, she made the first move.
I’m just wondering if she sued first before she even promoted the competing product. It would definitely change the facts there if that’s the case.
MATT: That’s a good point, too. I’m kind of stuck on the fact that one of the few things I do know about Paris Hilton is she hates how big her feet are. I remember seeing that. This is true! I remember seeing this at one point just randomly so I don’t know why she would get in with a shoe company or a footwear company if she really hates her feet that much.
NASIR: There is your weekly celebrity fact of the week. I did not know that.
MATT: I don’t know why I know that but I remember hearing it at one point.
NASIR: It may not even be true. In fact, it sounds like you made it up just now. I’m not saying anything.
MATT: She is tall so it makes sense.
NASIR: Yeah, it does make sense.
Lesson to be learned is that, just because you have an agreement that may not specify a term that you can do certain things doesn’t mean that you still should because this covenant of good faith and fair dealing is kind of a catch-all.
To be fair, it’s not the best legal argument because, if you’re depending upon that term, that means that, really, you don’t have anything else to stand on. And so, it’s not looking good on that end because it’s still hard to prove but it’s just something to keep in mind when you are contracting with other people.
MATT: Yeah, definitely. I think you’re exactly right, and so was I.
In her 2006, autobiography, she confessed – and I don’t know, why is she writing an autobiography in 2006? First off, that’s weird.
NASIR: Well, that’s probably how you found out. You probably read it, right?
MATT: Yeah, I forgot that I did read it. She says, “Okay, I admit it. I desperately hate one thing about my body. I have size 11 feet.” There you go. Fact of the day.
[MUSIC]
NASIR: All right. Well, let’s get to our question of the day. That was a nice Paris Hilton break.
MATT: With a fact of the day followed right after the question of the day.
NASIR: Very good.
MATT: “Is it legal to record audio of employees in the workplace without their consent?”
They didn’t tell us where this question is from which actually is kind of important because it’s a state-by-state issue.
NASIR: First, let’s get the concept here. We have employers that are basically spying on their employees and it reminds me of how just the employer-employee relationship just has changed quite a bit, right? There’s no loyalty among employees anymore and employers are just so afraid of employment issues that they’re so distrustful of the employees that they’re scared of dealing with them. I wonder if this aspect of spying on your employees is becoming more prominent because of that but I have to mention this because you know how I said that there’s a covenant of good faith and fair dealing implied in almost every contract? There’s also a covenant of duty of loyalty amongst employees. And so, that kind of relates to this as well.
Anyway, to answer the question, maybe you should start talking because I went on a big tangent there.
MATT: You didn’t even come close to actually answering the question. You have your own…
NASIR: I made up my own question and then I answered it.
MATT: Did you write this question? You just wanted a platform to speak your opinions?
NASIR: Actually, I don’t ever really read the questions. I just answer the questions that I feel like answering in my head.
MATT: So, let’s see… Is it legal to record audio of employees in the workplace without their consent? I’m going to say no. this seems like a pretty clear-cut no. If you do it without their consent, I would think even with their consent, you might run into some issues but at least you have a much better argument that you’re allowed to do it and you can do it for quality control reasons like that. I would think, in those instances, you’d be able to get by. But, without their consent, yeah, I don’t see that working out for you as the employer.
NASIR: Yeah. In fact, both federally and state, there’s pretty strict wiretapping laws and this would be considered wiretapping – basically listening in to someone’s conversation without their knowledge or consent. Without their consent, I would assume it’s without their knowledge, too. I’m trying to figure out, is there a way to record audio of your employees and there may be a way but, even then, it’s really risky because, in most states, only one party of the conversation needs to have consent. But, if there’s a third party listening like an employer listening to an employee and a customer and only the employee consents, that’s basically wiretapping and that’s not allowed.
But what if it’s in a work environment where it’s just employees and all the employees know that their audio was being recorded and listened to? Then, I suppose, if it’s very clear and the consent is clear, then maybe. But then, the question is what if someone else walks in the room and their voice is recorded and they don’t know about the recording? Then, it’s whole other issue.
MATT: Yeah, that’s a good point. It seems pretty risky. I mean, even if you do have it in your employee policies, it just seems like you’ll run into some issues. Like you said, too, the whole I guess we will circle back to the point you were making in the beginning with loyalty issues. There’s just a lot of things that are going to come up if you try to do this – negative things.
NASIR: Just to specify, there are a few states like California and there’s probably a few other that I can’t think of that require both parties to consent to the recording. What that means is that, if Matt and I are recording right now, we both have knowledge that it’s recording. But, if someone else is recording us and we don’t know, then that’s a problem.
MATT: Yeah, I think that’s it. I think we got it. We were able to let you voice your opinions and then also answer the question. That’s a good job.
NASIR: And now I’m getting paranoid that someone might be recording our conversation right now.
MATT: All right. Well, I think that’s it. We told people where to send their questions in.
NASIR: Thanks for joining us!
MATT: Keep it sound and keep it smart!

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Legally Sound | Smart Business covers the top business stories with a legal twist. Hosted by attorneys Nasir N. Pasha and Matt Staub of Pasha Law, Legally Sound | Smart Business is a podcast geared towards small business owners.

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